89R6409 JXC-F     By: Creighton S.B. No. 1856       A BILL TO BE ENTITLED   AN ACT   relating to a capacity cost recovery rider for certain electric   utilities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter E, Chapter 36, Utilities Code, is   amended by adding Section 36.216 to read as follows:          Sec. 36.216.  RECOVERY OF ANNUAL CAPACITY-RELATED COSTS.   (a) This section applies only to an electric utility that operates   solely outside of ERCOT in areas of this state included in the   Southeastern Electric Reliability Council.          (b)  It is the intent of the legislature that:                (1)  an electric utility's recovery of capacity-related   costs and return of capacity-related revenues, which may fluctuate,   should be accomplished as contemporaneously as possible with the   incurrence of those costs and the receipt of those revenues; and                (2)  a regulatory authority should presume to be just   and reasonable capacity-related costs incurred or capacity-related   revenues received through an electric utility's participation in a   multi-state auction operated by a regional transmission   organization or independent system organization authorized by the   Federal Energy Regulatory Commission, as well as those costs and   revenues incurred or received under a power purchase agreement   under the jurisdiction of the Federal Energy Regulatory Commission,   and any associated refund or surcharge.          (c)  On application by an electric utility, the commission   shall establish a capacity cost recovery rider that can be updated   at least annually and that ensures timely:                (1)  recovery of the utility's costs that are eligible   as provided by Subsection (d); and                (2)  return of the utility's revenues that are eligible   as provided by Subsection (d).          (d)  In this section, eligible costs and revenues include:                (1)  costs and revenues associated with the electric   utility's participation in a multi-state capacity auction operated   by a regional transmission organization or independent system   organization authorized by the Federal Energy Regulatory   Commission; and                (2)  capacity-related costs and revenues associated   with the utility's participation in power purchase agreements under   the jurisdiction of the Federal Energy Regulatory Commission,   including associated refunds and surcharges ordered by the Federal   Energy Regulatory Commission, to the extent the costs and revenues   are not included in the utility's base rates.          (e)  In each base rate proceeding following the   establishment of a capacity cost recovery rider, the regulatory   authority shall adjust the revenue requirement and rates of the   electric utility's capacity cost recovery rider to include all   eligible costs and revenues. The electric utility may not continue   to include eligible costs or revenues in the utility's base rates   unless the utility seeks and the commission approves termination of   the utility's capacity cost recovery rider in a subsequent base   rate proceeding.          (f)  The annual revenue requirement and rates for a proposed   capacity cost recovery rider must include:                (1)  the electric utility's calculated costs or   revenues for the upcoming year beginning on the June 1 associated   with the utility's participation in a multi-state capacity auction;                (2)  the utility's costs or revenues for the upcoming   year beginning on the June 1 associated with any power purchase   agreements under the jurisdiction of the Federal Energy Regulatory   Commission, including any associated refunds or surcharges   required by a Federal Energy Regulatory Commission order issued in   the previous 12-month period; and                (3)  a true-up amount that accounts for any difference   between the utility's actual eligible costs and revenues and the   utility's actual collections under any capacity cost recovery rider   put into effect two years before the proposed effective date of the   proposed rider, plus:                      (A)  an amount to account for any mathematical   error identified in the utility's most recent capacity cost   recovery rider application proceeding; and                      (B)  an amount to account for any refunds or   surcharges ordered by the Federal Energy Regulatory Commission or   by a regional transmission organization or independent system   organization related to a previous year's capacity auction that:                            (i)  are identified on a regional   transmission organization or independent system operator   settlement statement; or                            (ii)  were directed by a Federal Energy   Regulatory Commission order issued in the previous 12-month period.          (g)  The commission shall process an application to   establish or update a capacity cost recovery rider in accordance   with Subsections (h)-(k).          (h)  For a capacity cost recovery rider that will include an   electric utility's costs to be incurred beginning on June 1 of a   given year, the utility must submit the rider application not later   than:                (1)  May 15 of that year; or                (2)  if the regional transmission organization or   independent system operator publishes its capacity auction cost   results after the 20th business day of April of that year, a date   that is the same number of days after May 15 of that year as the   number of days after the 20th business day of April the results were   published.          (i)  A response to the electric utility's filing that is made   by commission staff or an intervenor:                (1)  must be filed not later than the seventh day after   the date of the utility's filing; and                (2)  may address only the mathematical accuracy of the   utility's proposed capacity cost recovery rider revenue   requirement and rates.          (j)  An inaccuracy identified under Subsection (i)(2) may be   addressed only in the electric utility's next capacity cost   recovery rider application.          (k)  The regulatory authority shall issue an order approving   an electric utility's proposed capacity cost recovery rider not   later than the 10th day after receipt of the utility's application.   The electric utility may begin billing the rates proposed in the   approved application for service rendered after the May 31 after   the application is filed.          SECTION 2.  An electric utility to which Section 36.216,   Utilities Code, as added by this Act, applies may file an   application with a regulatory authority to recover eligible costs   described by Section 36.216(d), Utilities Code, as added by this   Act, to be incurred before September 1, 2026, regardless of whether   the Public Utility Commission of Texas has adopted any rules   regarding capacity cost recovery riders. Not later than the 10th   date after the date the application is filed, the regulatory   authority shall issue an order authorizing the electric utility to   begin imposing the rates proposed in the application for service   rendered during or after the first billing cycle of the month   following the issuance of the order.          SECTION 3.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution. If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2025.